AMN - SOUTH AFRICA: Funds for Boikarabelo development

Resource Generation (Resgen) has signed an extension of a 2014 agreement under which Noble Resources International has agreed to make further funds available of up to $8.4 million to Resgen subsidiary Ledjadja Coal (LCL) to fund development of the Boikarabelo Coal Project in South Africa.

These funds are expected to enable the company to continue operating whilst project funding is secured. They will be available in three tranches until September 30, 2017.

As part of negotiating the extension to the facility, Resgen has also agreed to restate the existing domestic offtake and coal marketing agreements it has with Noble and its related bodies corporate with effect from December 31, 2013, including the incorporation of a term sheet signed in 2013.

A summary of the key principles of the restatement agreements is:

• 3 Mt/y of Boikarabelo domestic thermal coal for a 8 year period from first delivery subject to certain quality specifications with two purchase price options at Noble’s election, with the opportunity for LCL to participate in the upside in any on-sale.

• Inclusion of a fee payable to Noble of the price paid by it for domestic coal but to the extent that any such fee is paid to Noble. The lender is not entitled to be paid a marketing fee for domestic coal.

• First right of refusal for Noble to purchase any additional uncontracted coal to be produced from the mine on terms to be agreed by June 30, 2017, failing which on the same terms as the Sale and Purchase of Boikarabelo Thermal Coal dated December 31, 2012 (and restated on March 28, 2013).

Marketing Arrangements:

• Noble is appointed as exclusive supply chain management and marketing adviser for both export and domestic coal for a period of 35 years under separate contractual arrangements.

• Noble is entitled to fees depending on whether domestic, export or certain contracts are already in place at the time of the agreement.

Resgen continues to pursue project funding options. Resgen is an emerging ASX and JSE-listed energy company developing the Boikarabelo mine in South Africa’s Waterberg region, which accounts for around 40% of the country’s currently known coal resources.

Boikarabelo resources total 995 million tonnes and reserves total 267 million tonnes applying the JORC Code 2012. Stage 1 of mine development targets saleable coal production of 6 Mt/y.

www.resgen.com.au

News courtesy of International Mining